Best Buy CEO: 2023 will be a low point in tech demand as inflation-wary shoppers pull back

U.S. shoppers have continued to pull back on tech spending, according to the latest earnings report from Best Buy.

The retailer on Tuesday lowered the high end of its full-year revenue outlook amid declining sales, and now expects to make between $43.8 billion and $44.5 billion in revenue during fiscal year 2024, down from its prior guidance of up to $45.2 billion. Comparable sales from stores, websites and call centers open at least 14 months are expected to dip 4.5% to 6% this year, compared to the previous estimate of 3% to 6%.

After a surge in demand brought on by the COVID-19 pandemic, sales are now reverting to pre-pandemic levels.

CEO Corie Barry noted that persistent inflation has influenced spending decisions, and shifting consumer habits mean more discretionary spending is going toward experiences that were unavailable during lockdowns, like travel.

Other retailers like Target also said that consumers are pulling back on purchasing discretionary products.

“We continue to expect that this year will be the low point in tech demand after two years of sales declines,” Barry said during a call with investors. 

Despite the challenges, Best Buy’s second-quarter financial results were better than expected, with comparable sales down 6.2%. Comparable store sales in the U.S. were down 6.3%, while domestic online sales were down 7.1%. Net earnings were $274 million for the quarter, compared with $306 million a year prior.  

The Minneapolis-based company expects to see tech sales stabilize next year, with growth anticipated in home theaters, gaming, and mobile phone sales. 

“Next year, the consumer electronics industry should see stabilization and possibly growth driven by the natural upgrade and replacement cycles for the tech brought early in the pandemic and the normalization of tech innovation,” Barry said. 

Best Buy shares were up more than 5% early Tuesday afternoon, trading at $78.24 on the New York Stock Exchange.

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